Can legislation to close a purchasing loophole reduce the NHS medicines bill?

A law that gives the government better control over the cost of
drugs is expected to save NHS England £88m a year.

Before the Health Service
Medical Supplies Costs Act came into force, the Health Secretary controlled the
price of branded medicines through the voluntary pharmaceutical price
regulation scheme (PPRS), under which companies pay the Department of Health
based on sales to the NHS. However, companies that do not join the PPRS use a
statutory scheme, which allows them to sell to the NHS at a mark-down down from
their list price.

Companies have been switching
patent-expired drugs over from PPRS to the statutory scheme and then increasing
their listed price in an effort to preserve profits. The government relies on
market forces to keep the prices of generics down, but where there is no
competition companies are free to increase prices.

The new act will allow the
Health Secretary to apply the same price controls to both schemes and to act on
price increases. It will also force those who manufacture, distribute or supply
drugs and medical items to disclose prices to the government.

The British Generics Manufacturers
Association has called for more transparency and warns that interfering with
the system may increase prices and have a negative impact on supply.